Feeling squeezed? You're not alone. Why budgets are tighter in 2026 (and a free spreadsheet to help)

Why does everything feel more expensive?

Prices keep rising, and recently they've been rising faster. The ABS says the Consumer Price Index (CPI), the standard measure of inflation, rose 4.0% in the 12 months to August 2026, up from 3.5% in July.⁴ Housing costs rose 5.7% over the year, and transport rose 5.6%, which the ABS put down to higher fuel prices.⁴

For context, the RBA aims to keep inflation between 2 and 3 per cent.³ We're currently above that range, which is the main reason interest rates are moving.

Why is the RBA raising interest rates?

On 29 September 2026 the RBA increased the cash rate target by 0.25 percentage points to 4.60%.¹ It was the fourth rise this year: the rate sat at 3.60% until February, so that's 1.00 percentage point of increases in 2026.²

The RBA's reasoning is straightforward. It said inflation "remains elevated", that the conflict in the Middle East had broadened and global energy prices were "much higher" than it had assumed only weeks earlier, and that higher fuel prices were partly being passed through to other goods and services.¹ Its job is to stop high inflation from becoming "embedded", and raising rates is its tool for slowing spending so prices settle down.¹ The RBA has also said it will raise rates again "if needed".¹

The RBA expects inflation to come back to the middle of its 2-3% target range by early 2028.³ In other words, relief is expected, but not overnight.

Most of the earlier increases have already flowed into scheduled mortgage payments, which are "relatively high as a share of household disposable income".³ If you have a variable-rate loan, you've probably felt it.

Wages haven't kept pace

Here's the part that surprises many people. Wages are growing, but prices have grown faster over the longer run.

The ABS Wage Price Index rose 3.2% over the year to June 2026.⁵ Over the same period, annual inflation was around 3.9% on the RBA's reading of the June quarter.³ So in the latest year, pay rises lagged prices by a little.

Zoom out and it's more striking. Using the ABS's annual figures for each June quarter since 2016,⁵⁶ our own calculation is that wages have risen roughly 30% over ten years while consumer prices have risen roughly 35%. That's an approximation (the wage index measures hourly pay rates, not take-home pay or your household's particular costs), but the direction is clear: for the average household, the weekly pay packet buys a bit less than it did a decade ago. The RBA also points to weaker growth in real household disposable income this year.³

Petrol and the Middle East: what the data shows

Fuel is where many people feel it first, so let's keep to the facts.

The ACCC, which monitors fuel prices every week, reported that the average price of regular unleaded across the five biggest cities was 236.0 cents per litre on 30 September. On 20 February, about a week before the conflict between the United States, Israel and Iran escalated, it was 170.9 cents, so petrol is 65.1 cents a litre higher than before. It's down 21.2 cents from the 31 March peak of 257.2 cents.⁷

Why? The ACCC explains that Australian pump prices are largely driven by international refined-fuel prices.⁷ The International Energy Agency says more than 10 million barrels a day of Gulf oil output remained shut in as at its September report, and it doesn't expect the recovery in Gulf supply until 2027.⁸ There have also been tax changes: the temporary cut to fuel excise ended, and the excise was fully restored to 53.7 cents a litre on 3 August.⁷

No one can say where prices go next, but we can plan around today's price (our spreadsheet has a fuel what-if tab for that). The ACCC's own tip is a good one: shop around with a fuel-price app before you fill up.⁷

What does it mean for your household budget?

The RBA's latest Financial Stability Review (1 October 2026) has some reassuring news and some honest caution. Most households with mortgages are coping: loan arrears remain low, helped by a strong jobs market and savings buffers. But the RBA also says "some households continue to experience hardship", arrears have picked up recently, and there are "pockets of stress", particularly for lower-income borrowers.⁹

So the picture is mixed. Plenty of people are managing and plenty are stretched. If you're in the second group, there's nothing to be embarrassed about: it's a normal response to an unusual mix of higher prices, higher interest rates and higher fuel costs.

The first step: put it all on one page

It's hard to fix what you can't see. Most of us carry a rough idea of what we spend, and a budget replaces that guesswork with a clear picture.

ASIC's MoneySmart suggests a simple approach: list your income, list your expenses (set the right payment frequency for each item, because mixing up weekly and monthly bills skews the results), add your debt repayments, set a savings goal, then review it regularly.¹⁰¹¹ Checking monthly keeps it accurate, and setting up an automatic transfer to savings on pay day helps it stick.¹¹

Download our free budget spreadsheet

Stop putting off your finances. Try our free budget spreadsheet.

We've built a clean, easy-to-use Excel budget planner so you don't have to start from a blank page. Use the download button below to get it. (A web version of the planner is coming soon.)

Here's what's inside:

• Income for multiple earners, with a frequency converter (weekly, fortnightly, monthly, annual) so everything lines up.
• Expenses covering housing, utilities, groceries, transport and fuel, insurance, kids, health, subscriptions, entertainment and debts, each tagged as a Need, Want or Saving.
• Debts with balances, rates, minimum repayments and an interest estimate.
• Summary dashboard showing your surplus or deficit, a 50/30/20 comparison (a handy guide, not a rule, since rent or fuel can legitimately push "needs" higher) and the share of income going to debt.
• Fuel-price what-if: see what your weekly fuel cost looks like at different prices per litre.
• Rate-rise what-if: see what another 0.25% or 0.50% could mean for a variable loan.
• 90-day action plan to turn the numbers into next steps.

It's private by design: the spreadsheet lives on your own computer, and nothing is sent to us.

Meet That's Y Refi

If your budget shows several debts all due on different dates (credit cards, buy now pay later, personal loans, store cards), you might wonder whether they could be combined.

That's Y Refi is our partner brand, powered by Finsterl Finance. It helps people see whether their unsecured personal debts could be rolled into one repayment: one loan, one due date, a lot less juggling. It's built for credit cards, BNPL, personal loans, store cards and unsecured car loans (home loans and HECS-HELP aren't included). There's a free calculator at thatsyrefi.com.au that needs no credit check and no personal details. That's Y Refi is a credit broker, not a lender: our team works with lenders to find options that could suit your situation, subject to lending criteria.

An obligation-free review of your outgoings

A spreadsheet is a great start, and sometimes a chat with a real person finishes the job. Our Finsterl specialists offer an obligation-free review of your outgoings. In a relaxed conversation, we'll:

1. Map out where things stand today: income, essential costs, debts and repayments.
2. Build a structured budget with you, so you know what's coming in and going out.
3. Look at how potential debt consolidation may help, if it's relevant to you.

You decide what happens next, and there's no obligation.

We'll also be upfront: consolidating isn't right for everyone. MoneySmart notes that consolidation may cost more if the interest rate or fees are higher, or if the new loan runs for longer. A lower repayment over a longer term can mean paying more interest overall.¹² It tends to work best when you end up paying less overall, have a clear end date and stop using the old credit.¹² That's why we look at your whole picture, not just the size of the repayment.

Call us on 1300 508 827, book an obligation-free review, or start with the free calculator at thatsyrefi.com.au.

Three small things to do this week

1. Download the spreadsheet and fill in the Income and Expenses tabs. Allow about 30 minutes and have your latest bank statements handy.
2. Check your biggest "needs": insurance, energy plan, phone and internet. It can pay to compare.
3. Pick a number you can control, such as a weekly fuel budget or a subscriptions clean-up, and set it for the next four weeks.

You're not behind, and you're not alone. A clear picture is the first step to getting some breathing room back.

Related finance

References

Accessed 11 October 2026

1. Reserve Bank of Australia, Statement by the Monetary Policy Board: Monetary Policy Decision, Media Release 2026-27, 29 September 2026. https://www.rba.gov.au/media-releases/2026/mr-26-27.html ↩
2. Reserve Bank of Australia, Cash Rate Target (decision table). https://www.rba.gov.au/statistics/cash-rate/index.html ↩
3. Reserve Bank of Australia, Statement on Monetary Policy, August 2026: Overview. https://www.rba.gov.au/publications/smp/2026/aug/overview.html ↩
4. Australian Bureau of Statistics, CPI rose 4.0% in the year to August 2026, released 30 September 2026. https://www.abs.gov.au/media-centre/media-releases/cpi-rose-40-year-august-2026 ↩
5. Australian Bureau of Statistics, Annual wage growth of 3.2% in June quarter 2026 (Wage Price Index), released 19 August 2026. https://www.abs.gov.au/media-centre/media-releases/annual-wage-growth-32-june-quarter-2026 ↩
6. Australian Bureau of Statistics, Consumer Price Index, Australia, September Quarter 2025 (historical annual CPI by quarter), released 29 October 2025. https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/sep-quarter-2025. The ten-year comparison is Finsterl's own calculation chaining ABS annual rates for each June quarter from 2017 to 2026 (June 2026 CPI taken as 3.9% per footnote 3); it is an approximation. ↩
7. Australian Competition and Consumer Commission, Weekly fuel price monitoring report, 2 October 2026 (prices to 30 September 2026). https://www.accc.gov.au/system/files/weekly-fuel-price-monitoring-report-2-october-2026.pdf ↩
8. International Energy Agency, Oil Market Report – September 2026, published 11 September 2026. https://www.iea.org/reports/oil-market-report-september-2026 ↩
9. Reserve Bank of Australia, Financial Stability Review – October 2026, Chapter 2 "Resilience of Australian Households and Businesses", 1 October 2026. https://www.rba.gov.au/publications/fsr/2026/oct/resilience-of-australian-households-and-businesses.html and media release 2026-28, https://www.rba.gov.au/media-releases/2026/mr-26-28.html ↩
10. ASIC Moneysmart, Budget planner. https://moneysmart.gov.au/budgeting/budget-planner ↩
11. ASIC Moneysmart, How to do a budget. https://moneysmart.gov.au/budgeting/how-to-do-a-budget ↩
12. ASIC Moneysmart, Debt consolidation and refinancing. https://moneysmart.gov.au/managing-debt/debt-consolidation-and-refinancing ↩